Edrizio De La Cruz

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How To Build a Founding Team and—More Importantly—How Not To

Back in April 2013, Regalii (later renamed Arcus) had one month of runway left in the bank.

We were running out of money, so we started applying for pitch competitions in order to save the company and keep us afloat. It was a mixed bag; we won some and lost some.

So then we decided to apply to every startup incubator—500 Startups, TechStars, Entrepreneurs Roundtable Accelerator (ERA)—but all of them either ignored us or rejected us flat out. We ended up applying to YC, which was like applying to Harvard after being rejected by every community college out there. We were shocked when we heard that they wanted to interview us.

I was in LA and the rest of the founding team was in NYC, so we rushed to get everyone to San Francisco. We got there a few days before the interview and prepped for the interview like our lives depended on it—because, in many ways, they did.

When we stepped into the YC interview, it was a rapidfire 10 minutes—it was over before we knew it. As I walked out, I was nervous. We were in an Uber when we got the famous call from Geoff Ralston. He said, “Congratulations, Regalii has been accepted into the 2013 Y Combinator batch.”

The First Lesson Learned

The next thing Ralston offered was a piece of advice on equity distribution. He said it was always best to distribute equity as close to equal amongst the founding team. I started thinking about this, and also spoke with other founders who told me that's not necessarily reasonable. As I started thinking through the logic more and more, I realized that the issue wasn’t equal distribution, but the team itself.

If you don't want to make everyone equal, then there's probably a deeper reason for that. What we learned from Ralston’s piece of advice was that:

  1. We had too many people on the team

  2. Too many people on the team had similar skill sets

Here’s what our team looked like at the time: We had one engineer, four salespeople, and one designer. When it came to our sales team, they all had very similar backgrounds—all had worked in finance before—and none of them had actual sales experience or experience in remittance products.

We also had zero diversity: every team member was a Hispanic male. In addition, all had close personal ties to me. At the time, I thought, ‘I should prioritize people that I trust.’ However, that didn’t necessarily mean those people were the best fit for the founding roles. Overall, the group was very homogenous and too large for the stage we were at. 

Crafting Your Founding Team

The last thing you want for your team is a collection of skills and abilities that don't complement each other. At the end of the day, the size of your team is nowhere near as important as the qualities that each member brings to the table. It’s also important to remember that the more members there are, the tougher it is to make decisions.

Skill Sets over Friendships

When building a team, you may think it's always easier to work with friends—you're less likely to quit when shit gets tough, and it will get tough. While having a pre-existing relationship, be it personal or professional, with your co-founder is completely reasonable, you can’t prioritize friendships over skill sets when filling complementary roles.

The 3 Founding Team Principles

The perfect founding team should have three guiding principles:

  1. Think Big

  2. Get Shit Done

  3. G.R.I.T. (Guts, Resourceful, Initiative, Tenacity)

Together, these three make the Golden Triangle. Regardless of the team size, you need to fulfill these three principles in your founding roles. Let’s dig into them a little bit more.

Think Big

This principle is about the vision that sets up your overall strategy. A person who thinks big is likely going to pitch investors and the first batch of engineers you hire, because both groups are betting on your company and vision. The most important thing for your Big Thinker is their ability to communicate that big vision to the rest of the community. They need to attract the right people and be a great resource magnet, bringing in capital from investors, talent from engineers, and revenue from customers. This person also needs to think about the product road map as well as what needs to be built and what doesn’t.

Get Shit Done

The person that gets shit done is a hustler that goes out, executes, and closes deals. They need to be able to figure out how to get the first deals in; for B2B companies, that means finding the first business to be a client; for B2C companies, that means getting those first 10 consumers to use the product.

G.R.I.T

G.R.I.T is all about having the Guts to make bold decisions, being Resourceful by doing a lot with very little, taking Initiative by being proactive instead of reactive, and having the Tenacity to overcome all of the adversity that comes with starting a company. A person with G.R.I.T. is usually a salesperson or an engineer. If it's an engineer, they’ll take the first version of your product, hack their way through it, and get it to where it needs to be. They need to be able to figure out shortcuts in order to build your first MVP. 

Now, truth be told, all three of these principles should be reflected to some degree in all founding team members: The Big Thinker should have elements of G.R.I.T. The person that Gets Shit Done should have elements of the Big Thinker. And you may even be lucky enough to find someone that thinks big and gets shit done.

At an early stage, other roles might be helpful, but they're not really necessary. Therefore, if you have someone on your team that's not fulfilling one of these principles, terminate them. Don’t add more people to your team until you have a good amount of traction. That’s because when you start adding more roles, you end up shifting into company building instead of focusing on your product.